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Judgment
M.S. Menon, J.—The Petitioner hired a lorry from the Ex-Service Men''s Co-operative Transport and Workshop Society Ltd., No. 711, Ernakulam, on a monthly rent of Rs. 300/- under an agreement dated the 30th April 1951. The 3rd Respondent is the liquidator of the said Co-operative Society. The 1st Respondent is the Registrar of Co-operative Societies, Trivandrum, and the 2nd, the-Deputy Registrar of Co-operative Societies for Arbitration. Execution and Liquidation.
It is agreed that at the time of the contract the Petitioner was not a member of the-Co-operative Society, that he did become a moaner subsequently and that his membership does not subsist at present. Arbitration proceedings have been started u/s 60 of the Travancore Cochin Co-operative Societies Act, 1951, for amounts due under the contract, and the only question is whether the said proceedings are maintainable, or whether the Society''s remedy is only by way of a regular suit in an ordinary court of law.
The relevant portion of Section 60 of the-Travancore Cochin Co-operative Societies AIR 1951 (Act X of 1952) reads as follows:
(1) If any dispute ''touching the business of a registered society (other than a dispute regarding disciplinary action taken by the society or" its committee against a paid servant of the society) arises (a) among members, past members and persons claiming through members, past members-and deceased members, or between a member, past member or person, claiming through a member, past member and the society, its committee or any officer, agent or servant of the society, or
(c) Between the society or its committee and any past committee, any officer, agent or servant or any officer, past agent, or past servants or the nominee, heirs or legal representative of any deceased officer, deceased agent or deceased servant of the society, or (d) between the society and any other registered society, such dispute shall be referred to the Registrar for decision.
Explanation A claim by a registered society for any debt or demand due to it from a member, past member or the nominee, heir or, legal representative of a deceased member, where there such debt or demand be admitted or not and a dispute'' touching the business of the society within the meaning of this Sub-section.
It is not disputed that the controversy before the Registrar is a dispute "touching the business" of the Society and it is agreed that subjection (1), (a), (c) and (d) have no application to the present case. The only contention is that the dispute though one "touching the business of the Society", is not one "between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or servant of the society", and the jurisdiction of the Registrar is as a result not attracted.
In Manjeri S. Krishna Ayyar Vs. The Secretary, Urban Bank Ltd., Calicut and Another, Beasley, C.J. in dealing with Section 51(1) of the Madras Cooperative Societies Act, 1932, (corresponding to Section 60(1) of the Travancore-Cochin, Cooperative Societies Act, 1951) said:
I think it is clear that both under the Building Societies Act and the Friendly Societies Act in England which contain somewhat similar provisions as regards the settlement of dispute within the Society by the Registrar, that in order that such a dispute can be dealt with by the Registrar it must be a dispute between the society a member in his capacity as member.
Section 54 of the Bombay Co-operative Societies Act, 1925 (Act VII of 1925), as it stood at the time of the decision in Shyam Co-operative Housing Society Ltd. Vs. Ramibai Bhagwansing Advani and Others, was in the following terms:
If any dispute touching the constitution or business of a society arises between members or past members of the society or persons claiming through a member or past member or between members or past members or persons so claiming and any officer, agent, or servant of the society (past or present), or between the society or its committee, and any officer, agent, member or servant of the society (past or- present), it shall be referred to the Registrar for decision by himself or his nominee or if either of the parties so desires, to arbitration of three arbitrators who shall be the Registrar or his nominee and two persons of whom one shall be nominated by each of the parties concerned.
A dispute shall include claims by a society for debts or demands due to it from a member or '', past member or the heirs or assets of a past member whether such doubts or demands be admitted or not; provided that if the question at issue between a society and a claimant, or between different claimants, is one involving complicated questions of law and fact, the Registrar may, if ho thinks fit, suspend proceedings in the matter until the question has been tried by a regular matter instituted by one of the parties or by the Society. If no such suit is instituted within six months of the Registrar''s order suspending proceedings'' the Registrar shall taka "action as laid down in paragraph 1 of this section.
In that case a Trust which was a member of a co-operative Society instituted a. suit for the recovery of a sum of money advanced to the society and it was contended that the suit should be stayed on the ground that arbitration u/s 54 was the proper remedy open to the Trust. After holding that there was a dispute "touching the business" of the Society, the court dealt with the contention as follows:-
"Now, before a case falls u/s 54, it is not sufficient that there should be a dispute touching the business of the society. What is further required is that the dispute must be between the society and its member, and proper emphasis has got to be laid upon the expression ''member'' used in this section. The dispute must '' be between the society and the member as a member or qua a member. It must be a dispute in, which the member must be interested, as a member. It must relate to a transaction in which the member must be interested as a member. It is not every dispute between a society and a member which falls within the ambit of Section 54. There may be many disputes between the society and its members in which the members are not concerned as members at all, and they are in the same position as strangers. Take this very case.
The loan might have been raised from an outsider or from a stranger. The Society in this case chose to advance the loan to the society. That fact does not make it a dispute between the society and its member. There is no obligation upon the society to raise loans only from its members, nor is there any obligation upon its members to advance to the society. There are various matters where there might be a dispute between the society and the member where the member is interested or involved in the dispute as a member. In those cases Section 54 would have application.
But where we have a case where a member advances a loan to the society which he is under no obligation to advance, it is merely a coincidence that he happens to be a member of the society. It is not by reason of his capacity or position as a member that the loan was advanced. This transaction has nothing whatever to do with the rights or obligations of the party which advanced the loan as a member of the co-operative Society." and said that the case did not fall within the ambit of Section 54.
AIR 1952 Bom, 445 (B) came up for consideration in Malvan Co-operative Urban Bank Ltd. v. Kamulakar Narayan, (S) AIR 1955 Bom. In(C). In the latter case the court specifically dealt with the second paragraph of Section 54.
There is a second paragraph to Section 54 and before it: was amended under circumstances to which we shall presently refer, that paragraph'' read as follows;-
A dispute shall include claims by a society for debts or demands due to it from a member or past member or the heirs or assets of a past member, whether such debts or demands be admitted or not.
Therefore, the Legislature by enacting this second paragraph was extending the a dispute- which bad been defined in Section 54(1). To put it in a different language, the legislature by the second paragraph was enlarging the definition of a ''dispute'' which it had already given in Section 54 (1).
"The clear meaning of this paragraph is that a dispute, whether it touches the constitution or business of the society or not, would bet a dispute for the purpose of reference to arbitration u/s 54 if it consists of a claim by a society for debts or demands due to it from a member or past member or the heirs or assets of past member, whether such debts or demands be admitted or not. Therefore, for the purpose of this enlarged definition of a dispute, all that is necessary is that there should be a debt or demand .due to a society by a member and a claim to be made by a society in respect of that debt or demand.
It is unnecessary for the purpose of this enlarged definition that the debt must be due from the member in his capacity as a member or ''qua'' a member. It is sufficient if there is a debt or a demand due by the member howsoever the debt or demand might arise, provided the debt or demand js due to the society and a claim! is made by the society in respect oil that debt or demand.
Mr. Rege says that when we decided '' Shyam Co-operative Housing Society Ltd. Vs. Ramibai Bhagwansing Advani and Others, we interpreted and construed S. 54 and in; that interpretation we emphasised the fact that the dispute mast be between a society and a member ''qua'' a member and that principle which we laid down as underlying S.''54 (1) must apply: to all cases of disputes between a society and a member. Now, it is clear, even on a casual reading of our judgment, that we never considered the second paragraph of S. 54 (1) and we did not consider the second paragraph of Section 54;(1) for very good reasons. The case we had to consider was "a case of a debt claimed by a member against the society. We were not considering the case of a debt claimed by the society against the member.
The case before us was a converse case and that case was not covered by the second paragraph of Section54 (1). Therefore, ho occasion arose for the consideration of the second paragraph of Section 54 (1), and as the law stood then, it was dear that when a member made a claim against the society in respect of a debt, the society could not avail itself of the benefit of the provisions of arbitration contained in Section 54, and it is significant to note that after this decision was given the Legislature amended the second paragraph of Section 54, and the amendment is to the following effect:
as well as claims by a member or past member or the heirs of a past member for any debts or demands due to him from the society". This amendment was effected by Bombay Act 41 of 1953. Therefore, whereas the second paragraph before the amendment dealt only with a case of a debt claimed by a society against a member, the amendment now further enlarges the definition of a ''dispute'' and includes in that dispute a claim made by a member for a debt or demand against the society. Now, if thing amendment had already been effected when we gave our judgment in Shyam Co-operative Housing Society Ltd. Vs. Ramibai Bhagwansing Advani and Others, undoubtedly we would have had to consider the second paragraph, because it covered the facts of the case before us. But inasmuch as that amendment had not been effected and inasmuch as the second paragraph did not deal with the case of a member claiming a debt from a society, we only considered the first paragraph of S. 54. Therefore, the amendment effected by Act. 41 of 1953 had considerably simplified the matter.
The position after the amendment is this, that whether it is the society or a member who claims a debt or a demand from the other, the dispute can only be determined by the domestic forum set up by S. 54 and not by a civil Court. Therefore, the new amendment has displaced the decision given by us in AIR 1952 Bom'' 445 (B).
Rule 22 (1) of the Bengal Rules (made on 8-11-1920) reads as follows:
Any dispute touching the business of all registered society between members or past'' members of the society, or persons claiming through a member or past member, or between, a member or past member or persons so claing and the committee or any officer, shall be referred in writing to the Registrar.
In Mafizuddin Ahmad Vs. Narayanganj Central Co-operative Sale and Supply Society, Ltd. and Another, it was contended that a reference under the rule was not possible in that case. The court summarised the contention:
The second contention urged is that the reference was ultra vires inasmuch as the dispute was such and it was not between the society on the hand and the, two members on the, other qua members, but only in their capacity; as brokers, in other words, that the dispute, not being of a character referable to their membership but relating to transactions which they had" entered into as brokers, was not one coming'' within-the purview of the rule which enables the society to make a reference which may give'' jurisdiction to the Registrar to found the proceed dings"
and said that:
"The real answer to the contention, in our'' opinion is that the terms of Sub-rule (1), Rule 22 do, not confine the dispute to such as may be preferable to membership only. The view we take is '' supported by such decisions as Zamindara Bank, Sherpur Kalan v. Suba AIR 1924 Lah 418 (E) and Pokkunuri Dasaratha Rao Vs. Chevuru Subba Rao Pantulu, Secretary Co-operative Stores Ltd., .
In Kisanlal Ridhkarandas v. Co-operative Central Bank Ltd, Seoni AIR 1946 Nag 16 (G) the court summarised Mafizuddin Ahmad Vs. Narayanganj Central Co-operative Sale and Supply Society, Ltd. and Another, as follows:
In this case two persons executed a security bond in favour of a Co-operative Society in connection with their appointment as brokers for supplying jute to the society. It was contended that the dispute was not of a character referable to their membership as it related to transactions which they had entered into as brokers and consequently that the reference of the dispute to the Registrar of the Co-operative Societies was ultra vires. Their Lordships negatived, the contention on the view that the words of the rule did not confine the dispute to such as may be referable to membership only and adopted the conclusion reached in that case.
It is true "that statutes imposing restrictions upon the subjects'' right of suit should be strictly construed" as stated by the Lahore, High Court in the passage extracted on page 215 1 of Calvert''s "Law and Principles of Cooperation and that such restrictions should not be extended beyond what the words used actually cover''. We do not think we will be going beyond the words of S. 60 of the Travancore-Cochin Cor operative Societies Act, 1951, if we say that the) ambit of the section is the same as that sketched in Malvan Co-operative Urban Bank Ltd. Vs. Kamalakar Narayan Zantye and Others, and AIR 1933 Cal 26iF (D) and hold that so long as the parties to 5 dispute are those specified in that section and the dispute itself is one "touching the business of the society as defined therein the matter has to be dealt with under that section and not by way of a regular suit in an ordinary court .
As a matter of fact to say that even if, those two tests are satisfied a third element also should exist, viz., the refer ability of the dispute to the . membership of the Society as stated in Manjeri S. Krishna Ayyar Vs. The Secretary, Urban Bank Ltd., Calicut and Another, will be to introduce a reference which so far as we can see is not warranted by the wording of the section.
It follows that the petition has to be dismissed, and it is hereby dismissed, though in the circumstances of the case without any order as to costs.